Why Projecting When States Will Run Out of CHIP Funds is a Moving Target

This week we released a new report on the consequences of delayed Congressional action on the Children’s Health Insurance Program (CHIP). Federal funding for CHIP expired 27 days ago, an unprecedented lapse in CHIP’s 20-year history. Some policymakers have reasoned that the situation is not urgent because all states have some unspent funds available from the past two years of allotments, along with emergency funds that CMS will redistribute proportionally to states.

However, the clock is ticking. In less than 60 days, four states – Arizona, Minnesota, Ohio, and Oregon – are expected to exhaust all federal funds available to them for CHIP. At least four more states – California, the District of Columbia, Florida, and Texas – are expected to run out sometime in January. This is significant because California, Florida and Texas are among the five states with the largest CHIP enrollment. Along with New York and Pennsylvania, these states account for half of all children enrolled in CHIP.

But there is a lot of confusion around when states will run out. MACPAC first published projections last March that were updated in July, showing only four states running out of federal funds. Then the Kaiser Family Foundation reported that 11 states had indicated during the annual Medicaid budget survey in late summer that they expected to exhaust funds before the end of 2017. And recently, Politico reported that six states will run out of federal CHIP match before the end of the year.

So why so much shifting?

  • How quickly states run out of their allotments depends on how quickly they incur expenditures. Events, both positive and negative, can increase enrollment, like successful back-to-school outreach campaigns or disasters like Harvey and Irma.
  • States may be confused about how much money they will receive in redistribution funds and when, given that CMS has not publicly released any guidance on the redistribution.
  • States may be starting to count costs they will incur preparing for the changes to CHIP eligibility, including freezing new enrollment and disenrolling children currently relying on CHIP.
  • Where managed care arrangements require prepayment of capitation rates, states are factoring in the fact that they may have to back up projections a month because they will not have sufficient funding to pay health plans for the entire month in advance.

Regardless of the different lists of states at risk, one fact is clear. Within the next 90 days, at least eight states (including three states – California, Florida and Texas – that are among the five states that account for half of all CHIP enrollees) will run out of federal funds.

Congress should not leave to chance getting CHIP done before the first states take action to notify families that coverage will end in 30 to 60 days. It has already secured bipartisan agreement on the policy details in both the House and Senate, which is a significant accomplishment for this Congress. It’s time to finish the job to protect coverage for our nation’s children who rely on CHIP.